The Lyric Opera of Chicago is one of the largest and best-managed opera companies in the United States. Managing opera productions requires advance planning, including the development of scenery, costumes, and stage properties and the sale of tickets. To measure how well the company is operating in any given year, management must apply accrual accounting to these and other transactions. At year-end, April 30, 2011, Lyric Opera’s balance sheet showed deferred production costs and other assets of $1,978,322 and deferred ticket and other revenue of$12,710,639. What accounting policies and adjusting entries are applicable to these accounts? Why are they important to Lyric Opera’s management?

{a) Summarize What was the Monroe Doctrine?

{b) Clarify Problems Would the United States have looked weak if it had jointly issued a warning with Britain? Explain.

Mary Wade owns a small business that rents parking spaces to students at the local university. Mary’s typical rental contract requires the student to pay the year’s rent of $720 ($60 per month) in advance. When Mary prepares financial statements at the end of December, her accountant requires that Mary spread the $720 over the 12 months that a parking space is rented. Therefore, Mary can recognize only$240 revenue (4 months) from each contract in the year the cash is collected and must defer recognition of the remaining $480 (8 months) to next year. Mary argues that getting students to agree to rent the parking space is the most difficult part of the activity so she ought to be able to recognize all$720 as revenue when the cash is received from a student.

Required:

Explain why generally accepted accounting principles require the use of accrual accounting rather than cash-basis accounting for transactions like the one described here.

Solve the given problems.

In a modern hotel, where the elevators are directly observable from the lobby area (and a person can see from the elevators), a person in the lobby observes one of the elevators rising at the rate of $12.0$ ft/s. If the person was $50.0$ ft from the elevator when it left the lobby, how fast is the angle of elevation of the line of sight to the elevator increasing $10.0$ s later?

Katie Vote owns a small business that rents computers to students at the local university for the 9-month school year. Katie’s typical rental contract requires the student to pay the year’s rent of $1,800 ($200 per month) in advance. When Katie prepares financial statements at the end of December, her accountant requires that Katie spread the $1,800 over the 9 months that a computer is rented. Therefore, Katie can recognize only$800 revenue (4 months) from each computer rental contract in the year the cash is collected and must defer recognition of the remaining $1,000 (5 months) to next year. Katie argues that getting students to agree to rent the computer is the most difficult part of the activity so she ought to be able to recognize all$1,800 as revenue when the cash is received from a student.

Required:

Explain why generally accepted accounting principles require the use of accrual accounting rather than cash-basis accounting for transactions like the one described here.

Listed below are nine technical accounting terms used in this chapter:

$$\begin{array}{lll}\text { Unrecorded revenue } & \text { Adjusting entries } & \text { Accrued expenses } \\ \text { Book value } & \text { Matching principle } & \text { Accumulated depreciation } \\ \text { Unearned revenue } & \text { Materiality } & \text { Prepaid expenses }\end{array}$$

Each of the following statements may (or may not) describe one of these technical terms. For each statement, indicate the accounting term described, or answer "None" if the statement does not correctly describe any of the terms.
h. An expense representing the systematic allocation of an asset's cost over its useful life.

Listed below are nine technical accounting terms used in this chapter:

$$\begin{array}{lll}\text { Unrecorded revenue } & \text { Adjusting entries } & \text { Accrued expenses } \\ \text { Book value } & \text { Matching principle } & \text { Accumulated depreciation } \\ \text { Unearned revenue } & \text { Materiality } & \text { Prepaid expenses }\end{array}$$

Each of the following statements may (or may not) describe one of these technical terms. For each statement, indicate the accounting term described, or answer "None" if the statement does not correctly describe any of the terms.
f. A type of account credited when customers pay in advance for services to be rendered in the future.

True/False: Read design books alone will make you a great designer.

In each sentence below, a modifier is underlined. If the form of the modifier is incorrect, write the correct form above it. If it is already correct, write $C$ above it. Example 1. When he got up, Benjamin felt $\underline{\text{badder}}$ (worse) than when he had gone to bed.

10. Modern science fiction moves have gooder special effects than early movies did.

Critic's Corner The editors of the Folger Library edition of Julus Caesor point out that Elizabethans "did not have our modern distaste for dictators, ... and they admired forceful and successful leaders like Caesar." Do you see evidence of this admiration in Act One of the play? Would you say that Shakespeare himself admires Julius Caesar? Cite details from Act One to support your opinions.

Test your understanding of accounting for inventory by answering the following questions. Select the best choice from among the possible answers given. The sum of ending inventory and cost of goods sold is a. net purchases. b. beginning inventory. c. goods available. d. gross profit.

The United States Postal Service delivers about

$$2 ^ { 8 } \cdot 5 ^ { 2 }$$

pieces of mail each second. There are

$$2 ^ { 8 } \cdot 3 ^ { 4 } \cdot 5 ^ { 2 }$$

seconds in 6 days. How many pieces of mail does the United States Postal Service deliver in 6 days? Write your answer as an expression involving powers.

Modern vacuum pumps make it easy to attain pressures of the order of $10^{-13}$ atm in the laboratory. Consider a volume of air and treat the air as an ideal gas. (a) At a pressure of $9.00 \times 10^{-14}$ atm and an ordinary temperature of 300.0 K, how many molecules are present in a volume of $1.00 \mathrm{cm}^{3}$? (b) How many molecules would be present at the same temperature but at 1.00 atm instead?

Design an experiment to demonstrate the actions of the sympathetic and parasympathetic nervous systems on the iris of the eye.